The federal government’s decision to approve two pipelines last week raises a number of issues, but there is one we haven’t really heard in the debate so far: How should revenues earned from resource extraction be used? For us, this is a central question and one that touches directly on Canada’s well-being.
We believe a greater portion of resource revenues needs to be re-invested in creating the new economy Canada will need going forward. There are several ways we could do this, all of them well-tested.
Canada could start by following Norway’s lead and using a portion of resource revenues to create national or provincial wealth funds. Such funds could then be used to invest in the innovative Canadian companies that will create the jobs of the future. Norway’s wealth fund is worth about $860-billion (U.S.). That money will come in handy when its North Sea resources are depleted.
If wealth funds aren’t seen as desirable, governments could use increased resource revenues to give them the fiscal room to provide incentives for companies to expand in new areas, or to fund universities to improve education and undertake new research.
One way or another, the country needs to think hard about how it manages resource revenues in the future. Pumping oil out of the ground is like taking money out of the national savings account. It’s fine so long as the account is flush.
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